The Ruby Falls Independent School District receives significant payments in lieu of taxes from the federal government to reimburse the district for lost revenues because a military base, which is not subject to property tax, is within the district's boundaries. These payments should be reported as

Question

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The significant payments received by the Ruby Falls Independent School District from the federal government should be reported as revenue because they are payments for services rendered or goods sold. These payments are not classified as extraordinary, special items or transfers, and so the best choice is B which is revenue.

The Ruby Falls Independent School District Receives Significant Payments in Lieu